The U.S. House of Representatives passed the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions Act (The Heroes Act) on Friday, May 15, 2020 by a vote of 208 to 199 with some bipartisan support. However, a manager’s amendment reduces the number of borrowers who are eligible for student loan forgiveness.
The manager’s amendment limits the $10,000 in loan forgiveness for federal and private student loans to just economically-distressed borrowers.
An economically-distressed borrower is defined as a borrower who, as of March 12, 2020, satisfied any of these criteria:
- The borrower was or would have been eligible for a monthly payment of zero on an income-driven repayment plan.
- The borrower was in default on their student loans.
- The borrower had a serious delinquency (a student loan that was at least 90 days past due).
- The borrower was in an economic hardship deferment, an unemployment deferment, or an active cancer treatment deferment.
- The borrower was in a forbearance because the borrower was in a medical/dental internship or residency, the borrower’s debt burden exceeds 20% of the borrower’s income, or the borrower was serving in AmeriCorps.
- The interest on the borrower’s federal student loans was paid by the federal government under 10 USC 2174 because the borrower was serving on active duty with the U.S. Armed Forces.
A borrower whose income is less than 150% of the poverty line has a monthly payment of zero under the income-driven repayment plans. In 2020, 150% of the poverty line is $19,140 for a family of one in the continental U.S., $25,860 for a family of two and $39,300 for a family of four.
The manager’s amendment significantly cuts the number of eligible borrowers, reducing the cost of the loan forgiveness legislation by about half.
The manager’s amendment also changed the retroactive payments for borrowers of FFELP loans not held by the U.S. Department of Education to the amount paid by the borrower during the period or the amount that was due during the period, whichever is less. (The period runs from March 13, 2020 to the date of enactment of The Heroes Act.)
It is unclear whether the U.S. Senate will pass The Heroes Act.